Auto Industry Has Its Fingers Crossed for Trump's $1 Trillion Infrastructure Plan: Toyota Exec
As automakers dial back sales projections in a year that’s seen a rough start, the industry could be holding out hope for a legislative solution to lagging demand.
Toyota North America CEO Jim Lentz made this claim during the opening of the company’s expanded Ann Arbor research and design center on Thursday, adding that incentivizing new vehicles to draw down bulging inventories can’t continue forever. In his view, automakers are keeping extra vehicles on hand for a reason, not just because production hasn’t adjusted for slow sales.
Lentz, like other auto executives, is hoping for a sales bump in the event the Trump administration green-lights its proposed $1 trillion infrastructure plan.
The administration, which released its tax plan on April 26, is said to be readying a massive infrastucture plan — possibly fueled by an increase to the federal gas tax, which Trump has said he might support on the condition the money flows to highways. Details of the plan are coming “pretty soon,” Transportation Secretary Elaine Chao told CNBC on Monday.
Trump reportedly wants the proposal in front of Congress as soon as possible. According to Lentz, automakers want the same thing.
“If you get a $1 trillion stimulus, that could add 800,000 units,” Lentz said. “That’s one reason everyone is on the accelerator” trying to unload vehicles.
April auto sales in the U.S. fell nearly 5 percent, the fourth consecutive month of year-over-year declines. This follows a record year in which U.S. consumers snapped up 17.55 million new vehicles. For 2017, Lentz said he forecasts sales in the 17 to 17.2 million range.
While a boost to infrastructure spending could turn the tide on light-vehicles sales, Lentz knows automakers can’t keep up the current pace forever. Before long, manufacturers will be forced to decide “when is it prudent to lift off the accelerator,” he said, adding that the current level of incentives isn’t sustainable.
[Source: Reuters] [Image: Toyota Motor Corporation]
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